Thriving in the New Economy

Have you ever wanted to get into the minds of some of the most inspirational dealmakers in the business world? After working at CNBC for almost a decade, I have been lucky enough to talk to some of them on a regular basis. Realizing not everyone has that kind of access, I decided to open up my “trillion dollar” rolodex (it’s called that in my industry since I have a trillion dollar money manager, a dozen billionaires and countless millionaires in it) and ask them to open up and reveal some of their winning strategies on how they view a crisis (particularly the fire sale of Bear Stearns, the bankruptcy of Lehman Brothers and the credit crisis) but more importantly *how* and *why* they executed certain strategies. It’s those two elements that make successful leaders.

Thriving in the New Economy: Lessons from Today’s Top Business Minds by Lori Ann LaRocco   Thriving in the New Economy: Lessons from Today’s Top Business Minds is a collection of 23 candid stories from some of Wall Street’s most insightful investors and CEOs like Wilbur Ross, Don Marron, Jack Bogle and Steve Forbes. Quintessential long-term investor Ron Baron, founder of the Baron Funds says this is “the best investing opportunity in my lifetime….This business is about betting on people, about betting on people who have the long-term vision and are willing to sacrifice short-term profits to make their businesses impregnable over the long-term. That’s what this is all about.” Baron shares his stock picks and explains in detail why he is investing in those companies. Leaders are made, tested or broken in defining moments of history, and we are living in one of those moments right now. When I wrote the book, I specifically made sure I spread the wealth if you will, expanding the book from different perspectives: economy, banking, autos, real estate, retail and opportunities. No matter which legend I sat down with, there were common threads woven throughout each conversation. They were all nimble, did not get caught up in the moment, and they acted regardless of what the naysayers might be saying. “You are always going to have downturns in a free enterprise system,” says former FDIC Chairman Donald Powell. “You can’t have a rainbow until it rains.” It’s this sense of optimism that is heard in many of the stories in Thriving in the New Economy. When I was covering the fall of the financial markets, it got me thinking there has to be a flip side to the story. While everything was going down, there had to be opportunity for the strongest companies. Real Estate Millionaire Don Peebles said, “You are not just in business when it is a good time to sell, buy or develop. The challenge is to operate well in every aspect during every part of the business cycle.” Thriving in the New Economy is a celebration of capitalism, showing that good leaders can have a positive impact on the markets.

Gerald Greenwald, Founder of Greenbriar Equity Group, former CEO of UAL Corp, parent of United Airlines and former Chairman of Chrysler Motors, has followed a mantra he learned from Lee Iacocca back when the two were leading Chrysler out of the first government bailout. He told me, “If you are a leader, it is so much easier to slow down 10 stallions you have, than it is to get 10 mules to keep going.” How true! It’s advice like that anyone can use, whether you are running a multi-billion dollar corporation or a small business.

Leaders in the new economy also have to realize growth will be more modest. Gone are the go-go days of credit. We are experiencing what Goldman Sach’s Abby Joseph Cohen and Pimco’s Paul McCulley call “the new normal”. McCulley says, “The economy is weighing the invisible hand of the markets and the invisible fist of the government.” Ramius’ Peter Cohen said in this new economy, ” There will be a reshaping of the financial industry…. and people will work for less; they will work harder, and they will think out of the box and be creative.” Cohen, saw the changes in the financial sector ahead of time and took action. In a reverse merger, his company acquired Cowen Group. The $195 million dollar deal opened new doors for Ramius by providing access to the public markets, and the ability to forge a path in the beaten-down investment banking sector. This is just one kind of example in the book that shows leaders are more than rhetoric. They take action.

Home Depot Co-Founder and Chairman and CEO of Invemed Associates Ken Langone said, “I am always looking for opportunities. One person’s pain is another person’s pleasure.” Looking at a crisis from a glass half-full perspective is not only how these leaders operate, but how they seize on finding the right opportunity. BB&T’s Kelly King says, “When your competitors are weak, you certainly try to take business away from them if you can.” BB&T did just that. On August 14, 2009, BB&T purchased Colonial Bank’s (one of their rivals) loans, deposits, and most of its assets from the government.

All too often CEOs are painted as “cheerleaders”. Rhetoric is just a waste of air and can also be detrimental to a company, costing a hit in shareholder value. Larry Lindsey, CEO of the economic advisory firm The Lindsey Group, stresses objectivity is just one of several qualities leaders must have in order to stay ahead of a crisis. Lindsey says, “Objectivity requires perspective…. By far, the most useful tool in acquiring a perspective is a knowledge and sense of history.”

We all know leadership is vital. A good leader provides stability for a company. As both Jim Lentz, CEO of Toyota U.S.A and Gerry Greenwald both stress, you can’t save your way to profitability. Action is needed.

Lori Ann LaRocco is the author of, Thriving in the New Economy: Lessons from Today’s Top Business Minds and is the Senior Talent Producer at CNBC and one of the producers of the CNBC show Squawk Box.
 
 

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